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14th April 2014

Singapore Economy

Singapore’s GDP grew by 5.1% in Q1 2014

Growth lower than 5.5% growth
on-year seen in Q4 2013

Source: Today Online / Business

SINGAPORE — Singapore’s economy grew 5.1 per cent on-year in Q1
this year, or 0.1 per cent on-quarter on a seasonally-adjusted annualised
basis, according to advance estimates by the Ministry of Trade and Industry
(MTI).

This is lower than the 5.5 per cent growth on-year seen in the
previous quarter. The on-quarter growth last quarter was 6.1 per cent.

On a year-on-year basis, the manufacturing sector grew by 8.0 per
cent, compared to the 7.0 per cent expansion in Q4 last year. This faster pace
of expansion was largely due to a sharp rebound in biomedical manufacturing
output and stronger growth in chemicals output, said the MTI. On a
quarter-on-quarter basis, the sector grew at an annualised rate of 4.5 per
cent, compared to the growth of 10.4 per cent in the previous quarter.

The construction sector grew by 6.5 per cent on a year-on-year
basis in the first quarter, an improvement from the 4.8 per cent growth
recorded in the previous quarter. This was largely due to stronger expansion in
public sector construction activities, said the MTI. On a quarter-on-quarter
basis, the sector expanded at an annualised rate of 10.7 per cent, following
the 1.4 per cent growth in the preceding quarter.

Services producing industries grew by 4.7 per cent on a
year-on-year basis in Q1 this year, lower than the 5.9 per cent expansion in
the previous quarter. The moderation in growth was largely due to slower
expansion in the wholesale & retail trade and finance & insurance
sectors, said the MTI. On a quarter-on-quarter basis, the services producing
industries contracted at an annualised rate of 1.8 per cent, a reversal from
the 6.1 per cent expansion in the previous quarter.

MTI said that it will release the preliminary GDP estimates for Q1
this year, including performance by sectors, sources of growth, inflation,
employment and productivity, in its Economic Survey of Singapore next month.

Home buyers have found it harder to obtain loans in
the wake of tighter mortgage rules imposed last year. Real estate players said
buyers now have to wait longer for their loans to be approved and more are
having their loan applications rejected, after the total debt servicing ratio
(TDSR) framework was put in place in June by the Monetary Authority of
Singapore (MAS).

Total value of deals in 2014 predicted to be less
than half of last year's

Source: Business Times / Top Stories

[SINGAPORE] Shophouse transaction volumes continued to languish
for the third consecutive quarter, as demand took a hit following the
introduction of the Total Debt Servicing Ratio (TDSR) framework in late-June
last year. However, prices have continued to hold - due to a limited supply of
shophouses and most owners taking a longer-term horizon and having holding
power.

CBRE's analysis of caveats data shows that 26 shophouses changed
hands for a total $118.4 million in the first quarter of this year, down from
$149.3 million in Q4 last year and $197.2 milion in the preceding Q3. In Q1 and
Q2 last year the figures were $463.7 million and $458 million respectively,
reflecting the buoyant market pre-TDSR. CBRE's analysis covered only shophouses
on sites zoned for commercial use.

Shophouse transactions weakened to $346.5 million in the second
half of last year from $921.7 million in the first half - resulting in a
full-year figure of $1.27 billon, down from $1.38 billion in 2012.

Besides TDSR, which has tightened lending for property purchases
across the board, another key reason for the sharp slowdown in shophouse
transaction volumes is that prices have risen in the past few years to levels
beyond the affordability of most potential buyers, said Knight Frank executive
director Mary Sai.

Divorced administration clerk Hui San San, 38, will
finally have her own bed in 2017. For the last four years, she has shared a
queen-sized one with her two pre-teen daughters. The trio squeeze into one
bedroom in the three-roomer belonging to Madam Hui's parents in Jurong West.

Mr Jerry Tan, a used car business owner, has spent
RM20,000 (S$7,700) in the past four years to attend various property investor
clubs' talks in Kuala Lumpur. His reward? He managed to buy two condominiums in
2011 and 2012 on nearly 15 per cent discounts which promised to bring good
resale value

Asking pricesforLondonhomes rose to a record this month as values increased in all but one of the capital’s 32 boroughs, according to Rightmove Plc.

Prices in the U.K. capital climbed 3.6 percent from March to an average 572,348 pounds ($958,000), taking the gain from a year earlier to almost 16 percent, the website operator said in an e-mailed report today. Across England and Wales, values rose 2.6 percent to 262,594 pounds, also an all-time high, amid a lack of property for sale in southern England.

Britain’s housing market is being fueled by strengthening economic growth, record-low borrowing costs and official incentive programs. In London, where cash-rich buyers and overseas investors seeking safe assets are also stoking demand, rising house values are spilling into surrounding areas, according to Rightmove.

“While much of the growth since October 2007 is down to the boom in London, the ripple effect from the capital means other southern regions are starting to play catch-up,” Rightmove Director Miles Shipside said in the report. “Supply in much of the south is ridiculously tight.”

The north London boroughs of Brent, Camden and Haringey each saw asking prices rise more than 7 percent this month from March, Rightmove said. Only Richmond-upon-Thames recorded a decline -- 0.5 percent.

Demand Imbalance

Out of 10 regions in England and Wales, the West Midlands was alone in seeing property values drop. As well as London, the southeast, the southwest and East Anglia rose to all-time highs. Northern regions are on average 6 percent below their October 2007 levels, Rightmove said.

While a 13 percent increase in the number of properties coming to market over the past year may help to ease price pressures, the imbalance between supply and demand is more stark in the south, Rightmove said. This helped values on average to rise 3.5 percent in the southern regions in April from March, compared with a 0.8 percent gain in the north.

“While there are some hotspots emerging in the north, the momentum is not nearly as fast-paced and the better match between supply and demand means that the market is running at more sustainable levels,” Shipside said.

The strength in the housing market, partly fueled by the government’s Help to Buy program, has prompted Bank of England officials to warn that they’re ready to act should values look like they’re spiraling out of control.

Monthly Survey

BOE financial-stability policy makers have the powers needed to take the heat out of Britain’s housing market, according to 68 percent of respondents in the Bloomberg News monthly survey of economists published today.

Ernst & Young LLP’s Item Club said in a report today that it was “sceptical about the likelihood of an unsustainable house-price boom,” even as “market indicators point to further acceleration in activity and prices this year.”

“Caution on the part of lenders,” the introduction of tighter mortgage lending criteria later this month, and the BOE’s macroprudential tools “should deter rapid credit growth, the precursor to past episodes of excessive rises in property values,” it said. “We doubt that government incentives to encourage home purchases will do much to inflate a bubble.”